David Rosenberg: Why the Bank Of Canada needs to start cutting rates … Now

financialpost.com:

The most important inflation metric, the CPIX, which excludes the eight most volatile segments of the index, is running at 2.1 per cent on a year-over-year basis. That is pretty well on target, barely higher than the pre-COVID-19 trend, and less than half the pace of a year ago.

The year-over-year retail price index has gone from more than two per cent a year ago to flat today. There is absolutely no pricing power at all in the Canadian retail sector.

Real gross domestic product growth in the past year is running at 0.9 per cent, even with population gains running at 3.2 per cent year over year. The math works out to a decay in real output per capita of two per cent at an annual rate.

The unemployment rate, at 6.1 per cent, is higher today than it was pre-COVID-19, when the policy rate was 1.75 per cent, not five per cent. It is up a full percentage point on a year-over-year basis, which points to elevated 80 per cent recession odds. The ranks of unemployment have surged 23 per cent over the past 12 months as the number of people entering the labour force has nearly doubled the number of folks actually landing a job. Nothing here spells a future of accelerating wage inflation — quite the opposite.

Another measure of economic slack, the employment-to-population ratio, at 61.4 per cent, compares to the 62.1 per cent pre-COVID-19 level. Not only that, but the broadest form of unemployment that includes all measures of idle labour resources, otherwise known as the R-8 jobless rate, now stands at 8.8 per cent versus 7.5 per cent a year ago. That is nearly where it was in the comparable 2019 period (the data are not seasonally adjusted, so they have to be compared with March of prior years for comparative purposes), when, yet